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Nicaragua: thinking big

Monday, July 2, 2012

Along with an interocean canal, Nicaragua is considering an oil refinery, and a deepwater Caribbean port at Monkey Point, which would in turn need a new highway, to connect the facility with Managua.

All of these projects are pending. A canal project would be expensive and possibly controversial, since one version involves the San Juan River, which borders on Costa Rica, which could create obstacles to the project.

The refinery depends on support from Venezuela, whose decision may depend on oil prices staying high, as well the issue of whether or not Hugo Chávez, an ally of Nicaraguan president Daniel Ortega, is re elected in October.

As far as Monkey Point is concerned, many Nicaraguans consider that the cost of the project would exceed the value of its benefits.

On the other hand, the Ortega administration seems committed to major infrastructure projects, as one way of resolving Nicaragua’s problem of chronic underdevelopment.

To the extent that any of these programs proceeds, lead investors – Venezuelan, American, Korean or other – will already have decided how much of their funds will be spent.

But with projects of this magnitude, numerous attractive contracts will need to be awarded, for the provision of a wide variety of products and services.